Gujarat High Court custodies trouble, raw materials in Exported Goods manufacturing

Gujarat High Court custodies trouble, raw materials in Exported Goods manufacturing

In a remand order, the Gujarat High Court returned the matter back to the Assistant Commissioner for calculation of the ratio of input to the output of raw materials used in export goods manufacture.

In the writ application, Messers Filatex India Ltd. is an organization incorporated and registered under the Companies Act, 1956. In the writ application, the plaintiff alleges that the company manufactures textile yarn.

According to the complaint, the writ applicant - company was taxed during the old regime for its manufacturing activities by way of a tax on manufacturing goods. On yarns manufactured and shipped from the factory, the company discharged its obligation to pay Central Excise duty.

During the manufacture of the final product, the textile yarns, the company utilised various inputs and input services. Since the inputs and input services were supplied by the suppliers after payment of the essential excise duty, the company was able to claim an extended credit for the excise duty so paid on the inputs and input services.

In a unanimous ruling by a division bench of Justices J.B.Pardiwala and Nisha M.Thakore, the court set aside and quashed the order passed by Vadodara is, who the Joint Commissioner of CGST and Central Excise is. Keeping in mind the formula of input/output ratio of the inputs / raw materials used in the manufacturing of the exported goods, the Assistant Commissioner shall proceed further in accordance with the directions issued by the Joint Commissioner (Appeals) via the order and adjudicate the claim of the writ applicants. Accordingly, I am following the reasoning in the Principal Commissioner's affidavit-in-reply filed in this litigation, more specifically, according to the allegations. The entire process should be completed at the soonest possible date, and the writ applicants shall be paid within eight weeks of receiving the writ.

Accordingly, the Special Civil Application No.17703 of 2021, which is attached to the same writ application, is also successful. In regards to this connected writ application, we need to clarify one thing. Although the writ applicant filed the required refund claim in the connected writ application, the earlier claims are not now time-barred, since the proposed refund adjudication is to be conducted afresh. There is no need to clarify that the clearance of the deficiency memo will be a prerequisite for fresh adjudication," the court stated.